TDS Desk:

With just a month left for Ramadan, imports of essential food grains and consumer goods have seen a concerning decline, sparking fears of potential price hikes in the domestic market.

Traders and market analysts warn that this slowdown could exacerbate existing pressure on commodities, impacting millions of consumers.

During the July-November period of the ongoing fiscal year 2024-25, imports of capital goods witnessed a sharp decline by 15.67%, while food grains and consumer goods registered reductions by 3.86% and 6.37% respectively, according to Major Economic Indicators: Monthly Update of Bangladesh Bank.

This downward trend highlights a broad-based decrease in import activity across key categories during the comparative timeframe.

Every year, as Ramadan approaches, the prices of essential commodities such as oil, sugar, lentils, chickpeas, lentils and dates go up.

To manage the situation, traders usually import these goods 3-4 months in advance. However, there has been a deviation from this practice this year.

The food grain imports declined by 3.86% in the first five months of the current fiscal year compared to the corresponding period last year, according to the latest central bank data.

Of the total food grains, wheat import fell by 5.71% while rice import increased by 131.03%, according to the BB report.

Consumer goods saw a decline by 6.37% year-on-year, according to the data.

Of the total consumer goods, edible oil imports fell by 9.16% and sugar saw a 38.60% decline during the period.

Item-wise fresh opening and settlement of letters of credit (LCs) for consumer goods declined by 3.34% and 13.46% respectively year-on-year.

The opening and settlement of LCs for intermediate goods also saw a 12.25% and 15.67% fall respectively.

Agro-economist and researcher Dr Jahangir Alam Khan told this correspondent that the majority of the essential commodities are imported.

“The government should increase the supply of essentials ahead of Ramadan to keep the supply uninterrupted and the market stable,” he said.

“Although the government took different early measures, including duty cuts, to ensure adequate supply and control prices of essential goods during Ramadan, the imports of essential items have yet to gain pace,” he said, adding that it will be overcome if an adequate amount of essentials is imported.

He said traders usually increase the prices of essentials when the supply of consumer goods and other essentials decline in the market. “So, the government should remain alert.”

“Inadequate market management, a lack of available data on demand and supply, and the rising value of the dollar are also affecting the supply chain,” said the agro-economist.

Consumer Association of Bangladesh Vice-President SM Nazer Hossain blamed businessmen for always creating an artificial crisis ahead of Ramadan cashing in on the higher demand.

The government should monitor the import and supply of essential commodities during Ramadan so that businessmen cannot create any artificial crisis, he suggested.

Earlier on 11 November 2024, the central bank allowed delayed payment of bills for importing 11 essential food items ahead of the holy month of Ramadan. The products are rice, wheat, onion, pulses, edible oil, sugar, eggs, chickpeas, peas, spices and dates.

It said the decision was taken to facilitate transactions in the case of imports and the facility will be applicable till 31 March 2025.

On 6 November, the central bank issued a notification relaxing the previous 100% margin or security value for importing goods. Now that margin will be determined on the basis of the customer-bank relationship.

Ramadan is expected to begin in the country in the first week of March, leaving one month to prepare. Letters of credit for importing Ramadan essentials can be opened until the last week of January, while wholesale trading of these items will commence in February.

On 9 January, the Bangladesh Trade and Tariff Commission submitted a report to the Ministry of Commerce analysing the market situation for Ramadan essentials.

According to the ministry, the annual demand for sugar in the country is 2-2.2 million tonnes. Based on the estimation, the requirement for six months is around 1-1.1 million tonnes.

However, in the past six months, a total of 664,000 tonnes of sugar was imported while the demand for sugar is 300,000 tonnes alone in Ramadan.

Similarly, the annual demand for edible oils is around 2.2-2.3 million tonnes, with a requirement of 300,000 tonnes specifically during Ramadan. In the last six months, the demand for edible oil exceeded 1.15 million tonnes, while imports during this period amounted to 1.35 million tonnes.

The country’s annual demand for chickpeas is 200,000 tonnes, half of which is needed during Ramadan. Against the six-month demand of 100,000 tonnes, only 48,000 tonnes was imported.

The demand for lentils is 350,000 tonnes per year, with 100,000 tonnes required during Ramadan. From July to 5 January, the country imported 251,000 tonnes of lentils.

In addition, the demand for dates, a popular foreign fruit, is now consistent throughout the year. However, half of the country’s annual demand for dates falls during Ramadan. The yearly demand ranges between 90,000 tonnes and 110,000 tonnes, while the Tariff Commission estimates that 60,000 tonnes is needed for Ramadan. Yet, from July to the first week of January, only 5,883 tonnes of dates was imported.

Importers cite several factors behind this decline, including high international prices, soaring dollar rates and a foreign currency crisis, which prevented many importers from bringing in goods over the past six months.

Additionally, political instability has been a significant factor in reducing imports.